Tuesday 5 November 2013 17.14 EST
First published on Tuesday 5 November 2013 17.14 EST

BAE Systems is preparing to close its Portsmouth shipyard in an overhaul of its naval manufacturing operations that will put more than 1,000 jobs at risk on England's south coast and in Scotland.

The government and Britain's largest defence contractor are preparing to announce a restructuring of BAE's yards in Portsmouth as well as at Scotstoun and Govan in Glasgow, with statements due to be made later this week. .

It is understood that there will be a commitment to the future of shipbuilding on the river Clyde – a politically sensitive issue with the 2014 Scottish independence referendum looming – but there will still be job losses at the two Scottish sites, which employ 3,200 people.

However, ship construction is widely expected to cease at Portsmouth naval base, where 1,200 employees have worked on building hull sections for the HMS Queen Elizabeth and HMS Prince of Wales aircraft carriers.

The cuts come after BAE Systems has experienced the biggest peak in UK shipbuilding since the second world war, led by the £5.4bn aircraft carrier programme that that saw BAE share its allocation of the work across Portsmouth, Govan and Scotstoun. The next BAE project for the Royal Navy, the Type 26 combat ship, is not big enough to sustain all three sites.

Discussions about the restructuring have been taking place for more than a year between the Ministry of Defence (MoD), BAE Systems and trade unions.

BAE declined to be drawn on the potential job losses. "We continue to work closely with the MoD to explore all possible options to determine how best to sustain the capability to deliver complex warships in the UK in the future. This work is ongoing and we are committed to keeping our employees and trade unions informed as it progresses," the company said.

Hugh Scullion, general secretary of the Confederation of Shipbuilding and Engineering Unions, said: "We have secured talks with senior BAE systems executives early next week to examine the business case of the forthcoming announcement. The shipbuilding workforce throughout the UK are working flat out to deliver the aircraft carriers for the defence of the UK and they need to know what lies in store for them, their families and their communities."

The first of the carriers, Queen Elizabeth, is due to begin sea trials towards the end of the decade. A decision will not be taken until 2015 about whether the second carrier, Prince of Wales, will ever be operational; it could be sold or mothballed. The carriers were built by a consortium that included BAE.

The MoD said how BAE "rationalise their business" is a matter for the company. "Negotiations between the MoD and the Aircraft Carrier Alliance regarding the rebaselining of the Queen Elizabeth carrier programme are at an advanced stage," it said. "No final decisions [on the programme] have been taken."

If shipbuilding is wound down at Portsmouth, the MoD will have to bear costs that could run into hundreds of millions of pounds under a 2009 agreement guaranteeing BAE a minimum of £230m a year in shipbuilding and support work over 15 years. The agreement can be cancelled, but the MoD would be liable for closure costs and compensation to BAE for its lost investment.

An additional 2,900 BAE staff are employed in the Portsmouth area on tasks that include maintaining, servicing and upgrading the Royal Navy ships at the naval base. Their jobs are not expected to be affected by the announcement.

The future of the last major shipbuidling sites on the Clyde, a former powerhouse of the global shipping industry, is set to become a talking point of next year's referendum, with any threatened closure of the Scotstoun or Govan sites expected to benefit the independence campaign.

Scotland's finance secretary, John Swinney, said: "We have been in dialogue for some time with BAE Systems on the issues surrounding the future of the Clyde shipyards. We are awaiting the outcome of BAE's discussions with the MoD and are very alert to the situation concerning both yards. We are seeking urgent clarity on the future for both Govan and Scotstoun."